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HMRC internal manual

Double Taxation Relief Manual

From
HM Revenue & Customs
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DT: Philippines: double taxation agreement, Article 5: Permanent Establishment

(1) For the purposes of this Convention, the term `permanent establishment` means afixed place of business in which the business of the enterprise is wholly or partlycarried on.

(2) the term `permanent establishment` shall include especially:

  1. a place of management;

  2. a branch;

  3. an office;

  4. a factory;

  5. a workshop;

  6. a mine, oil well, quarry or other place of extraction of natural resources;

  7. an installation or structure used for the exploration of natural resources;

  8. a building site or construction or assembly project which exists for more than 183 days.

(3) An enterprise of a Contracting State shall likewise be deemed to have a permanentestablishment in the other Contracting State if:

  1. it carries on supervisory activities within that other Contracting State for more than 183 days in connection with a building site, or a construction or assembly project which is being undertaken. in that other Contracting State; or

  2. it furnishes services, including consultancy services, in that other Contracting State through its employees or other personnel (other than agents of an independent status within the meaning of paragraph (7) of this Article) for a period exceeding in the aggregate 183 days within any twelve-month period.

(4) The term `permanent establishment` shall not be deemed to include:

  1. the use of facilities solely for the purpose of storage, display or delivery of goods or merchandise belonging to the enterprise;

  2. the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of storage, display or delivery;

  3. the maintenance of a stock of goods or merchandise belonging to the enterprise solely for the purpose of processing by another enterprise;

  4. the maintenance of a fixed place of business solely for the purpose of purchasing goods or merchandise, or for collecting information, for the enterprise;

  5. the maintenance of a fixed place of business solely for the purpose of advertising, for the supply of information, for scientific research or for similar activities which have a preparatory or auxiliary character, for the enterprise.

(5) A person acting in a Contracting State on behalf of an enterprise of the otherContracting State–other than an agent of an independent status to whom the provisions ofparagraph (7) of this Article apply shall be deemed to be a permanent establishment in thefirst-mentioned State if:

  1. he has, and habitually exercises in that first-mentioned State, an authority to conclude contracts in the name of the enterprise, unless his activities are limited to the purchase of goods or merchandise for the enterprise; or

  2. he has no such authority but habitually maintains in that first-mentioned State a stock of goods or merchandise belonging to the enterprise from which he regularly delivers goods or merchandise on behalf of that enterprise.

(6) An insurance enterprise of a Contracting State shall, except with regard toreinsurance, be deemed to have a permanent establishment in the other Contracting State ifit collects premiums in the territory of that other State or insures risks situated therethrough an employee or representative established therein who is not an agent of anindependent status within the meaning of paragraph (7) of this Article.

(7) An enterprise of a Contracting State shall not be deemed to have a permanentestablishment in the other Contracting State merely because it carries on business in thatother State through a broker, general commission agent or any other agent of anindependent status, where such persons are acting in the ordinary course of theirbusiness. However, when the activities of such an agent are devoted wholly or almostwholly on behalf of that enterprise, he shall not be considered an agent of an independentstatus within the meaning of this paragraph.

(8) The fact that a company which is a resident of a Contracting State controls or iscontrolled by a company which is a resident of the other Contracting State, or whichcarries on business in that other State (whether through a permanent establishment orotherwise), shall not of itself constitute either company a permanent establishment of theother.